Formulas

Question 1

ROE

Answer 1

Net income/average stockholders equity

Question 2

ROE for companies with noncontrolling interest

Answer 2

net income attributable to company shareholders/average equity attributable to company shareholders

Question 3

Dupont analysis formula for ROE

Answer 3

(net income/average total assets)*(average total assets/average stockholders equity)

Question 4

ROE in terms of operating focus

Answer 4

operating return + nonoperating return

Question 5

ROA

Answer 5

net income/average total assets

Question 6

RNOA

Answer 6

net operating profit after tax/average net operating assets

Question 7

net operating assets

Answer 7

operating assets-operating liabilities

Question 8

whats included in operating assets

Answer 8

everything except for cash, cash equivalents, short term and long term investments, discontinued

Question 9

whats included in operating liabilities

Answer 9

everything except for long term debt short term borrowing, dividends payable, current and noncurrent lease liabilities, discontinued, interest payable

Question 10

adjusted ROA

Answer 10

(net income+(net interest *(1-tax)))/average total assets

Question 11

gross profit margin

Answer 11

gross profit/sales

Question 12

operating expense margin

Answer 12

general operating cost/sales

Question 13

asset turnover

Answer 13

sales/total average assets

Question 14

AR turnover

Answer 14

sales/average AR

Question 15

DSO

Answer 15

365/AR turnover

Question 16

Inventory turnover

Answer 16

COGS/average inventory

Question 17

ap turnover

Answer 17

COGS/average ap

Question 18

DIO

Answer 18

365/inventory turnover

Question 19

DPO

Answer 19

365/ap turnover

Question 20

CCC

Answer 20

DIO+DSO-DPO

Question 21

ppe turnover

Answer 21

sales/average ppe

Question 22

financial leverage

Answer 22

average total assets/average shareholders equity

Question 23

total liabilities to equity

Answer 23

total liabilities/total equity

Question 24

times interest earned

Answer 24

EBIT/gross interest expense

Question 25

which are profitability ratios

Answer 25

gross profit margin, operating expense margin, profit margin

Question 26

Productivity

Answer 26

AR turnover, Inventory turnover, SP turnover, CCC PPE turnover

Question 27

NOPAT

Answer 27

NOBT-tax on operating profit

Question 28

NOPBT

Answer 28

sales-operating expense

Question 29

operating expenses include

Answer 29

COGS, SG&A, R&D, Impairment (goodwill), other expense , gain/loss

Question 30

tax on operating profit

Answer 30

tax expense+pretax net nonoperating*tax rate

Question 31

expected credit loss

Answer 31

chance of deafult*loss given deafult

Question 32

EBITDA coverage ratio

Answer 32

(EBIT+depreciation+amortization)/gross interest expense

Question 33

cash from operation to toatl debt

Answer 33

cash from operations/(short term and long term debt)

Question 34

Free operating cash flow to total debt

Answer 34

(cash from operations-CAPEX)/short term+long term debt)

Question 35

current ratio

Answer 35

current assets/current liabilities

Question 36

quick ratio

Answer 36

(cash +marketable securities+ar)/current liabilities

Question 37

average rate of allowance to gross AR

Answer 37

allowance for doubtful accounts/gross AR

Question 38

accounts recievable

Answer 38

days sales outstanding*sales per day

Question 39

LIFO to FIFO inventory

Answer 39

LIFO inventory+LIFO reserve

Question 40

LIFO cogs to FIFO cogs

Answer 40

FIFOCOGS=LIFO COGS-Increase in LIFO reserve

Question 41

change in cash

Answer 41

change in DIO*(DOGS/365)

Question 42

alternate ap turnover method

Answer 42

purchases/average ap

Question 43

purchases

Answer 43

ending inventory-beginning inventory+COGS

Question 44

straight line depreciation expense

Answer 44

(acquisition cost-residual value)/useful life

Question 45

units of production depreciation method

Answer 45

depreciation rate per unit=(cost-residual)/life in units Depreciation expense=depreciation rate per unit*#of units produced for the year

Question 46

declining balance depreciation expense

Answer 46

carrying amount*2/useful life in years

Question 47

gain/loss on sales

Answer 47

proceeds from sale-netbook value of asset sold

Question 48

useful life

Answer 48

average depreciable asset cost/depreciation expense

Question 49

percent used up

Answer 49

accumulated depreciation/depreciable asset cost

Question 50

How to calculate sales growth for firms with homogeneous assets

Answer 50

(1+growth rate in new assets)*(1+growth in sales per asset)-1

Question 51

Which forecasting estimates are a percentage of sales

Answer 51

COGS, SGA, Working capital, Capex

Question 52

How to forecast using revenue per segment info

Answer 52

weighted average from each percentage of segment and growth rate

Question 53

Forecasting depreciation

Answer 53

Beginning PPE*estimated depreciation rate`

Question 54

forecasting depreciation rate

Answer 54

current year depreciation expense/prior year ppe

Question 55

Forecasting interest expense

Answer 55

average interest bearing debt*estimated interest rate

Question 56

nonoperating expense

Answer 56

assume no change

Question 57

transitory items forecast

Answer 57

0

Question 58

forecast net ppe

Answer 58

current year net ppe+forecasted Capex-forecasted depreciation expense

Question 59

forecast intangible assets

Answer 59

subtract amortization expense